Current Report No.: 47/2019

Date of preparation: 25.11.2019

Abbreviated name of the Issuer: CIECH S.A.

Legal basis: Art. 17.1 of the MAR – inside information

Subject: Adoption of the CIECH Group Reorganisation Concept

Contents of the Report:

In reference to Current Report No. 34/2018 of 5 December 2018, in which CIECH S.A. ("CIECH" or the "Company") informed on the adoption of the CIECH Group’s Strategy for 2019-2021 (the “Strategy”), Current Report No. 8/2019 of 19 March 2019, in which the Company advised on the initiation of a detailed review of options in terms of changes in the corporate and organisational structure and the structure of assets of the CIECH Group – the Company herewith informs that on 25 November 2019, the Management Board of the Company (the “Management Board”) adopted a resolution on the adoption of the reorganisation concept of the CIECH Group (the “Reorganisation Concept”). 

The Reorganisation Concept provides for the division of competences within the CIECH Group among individual business areas - business units (the “BUs”) and the Company. The adoption of the Reorganisation Concept is to serve the realisation of the key goal under the Strategy, i.e. the creation of an effective and diversified chemical holding generating long-term positive value for shareholders, as well as improvement of business and decision-making processes and improving the transparency of the operation of the CIECH Group. As part of the implementation of the Reorganisation Concept, activities have been envisaged which are aimed at separating independent entities within the CIECH Group that will constitute BUs or will be part of the individual CIECH Group BUs:

1. BU Soda;
2. BU Salt;
3. BU Agro;
4. BU Resins;
5. BU Silicates;
6. BU Packaging;
7. BU Foams.

CIECH is to operate as the entity managing the CIECH Group, responsible, among others, for building the long-term and sustainable value of the CIECH Group for all shareholders, defining the strategy of the CIECH Group, including individual BUs, setting goals for the BUs as well as monitoring and accounting for their achievement, providing specified services to BUs, and building and maintaining the desired organisational culture within the CIECH Group.

The purpose of the planned activities is to create such a structure of the CIECH Group in which each BU will operate as a separate company or a sub-holding company. BUs will be responsible for the implementation of their strategy and their financial results. All companies and sub-holding companies forming BUs will ultimately depend on the Issuer. In accordance with the assumptions of the Reorganisation Concept, there will be integration, consolidation and placing of the operational activity of the BU within such a BU. This will result, among others, in revenues and expenses from the BU's activities generated in such a BU.

In order to achieve the above, the adopted Reorganisation Concept involves a number of corporate activities, as a result of which the target structure of the CIECH Group is to be achieved through the division of companies or transfer of assets within the CIECH Group (i.e. contributions in kind, sale and liquidation of some companies, if applicable). The Management Board of the Company does not rule out changing the reorganisation method with regard to activities arising from the Reorganisation Concept, depending on the progress in obtaining necessary approvals or any other legal or business issues. In addition, further simplification of the CIECH Group structure is planned through mergers or liquidations of other subsidiaries of the Issuer with less significance for the Group. 

Given the complexity of this process, the need to obtain numerous administrative approvals and decisions, and the need to implement intra-group processes, such as divisions, capital increases requiring registration by competent courts, etc., at this stage, the planned date of the completion of the process of implementing the Reorganisation Concept is the end of 2022.

The Reorganisation Concept has been prepared in consultation with renowned tax and legal advisors in order to ensure that its implementation is carried out, to the largest extent, in a transparent and safe manner, from both a legal and a tax point of view, and in particular, taking into account the legal environment, including applicable laws and their current interpretation as presented by tax authorities or administrative courts.

Legal basis: Article 17.1 of the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of 16 April 2014 on Market Abuse (the Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Official Journal of the European Union L No. 173, p. 1).